RE:$21400.00/flowing boeSo is there opportunity in the market sentiment toward this stock?
Historically the stock traded at valuations better than its peers. Yes they took on too much debt and got hurt when the oil price started moved down. They were slow to cut the dividend and hence did essentially use debt to pay the dividend.
Historically they are a great dividend payor, historially return all profits (and more) to the shareholder. Mgmt is a large shareholder.
Market sentiment is against this stock. But they are generating netbacks over $50/barrel, 20 years of drilling avaiable, one of the slowest well decline rates in the industry... hence they can maintain production whilst spending less money.
They dont pay a dividend today... bank debt restricts them from doing so... the bank debt will be gone in 4 months because the company has huge FCF. They paid a dividend for 20 years plus... they will do it again once the debt is gone. The dividend was usually between $1.20-$3.60/yr. Average was around $2.50
So the market currently values the stock at 21K per flowing boe. What the market calls a problem... the company is trading at 2 time cash flow (TTM) when the industry is at 4 or 5 times. There Cash flow is even better in the last 2 quarters.
For me I look at their "market sentiment value today" vs what will be their market value when the bank debt is gone and they start to pay dividends again?
Assume a 5%-6% yield:
if div is $1.25... stock should be $20.00-$24.00
if div is $2.50... stock should be $40.00-$48.00.
I believe is the stock be cause I see a good management team that got caught when the market turned and is now judged as making a mistake. The stock paid the price... all the way down to $0.70... At $8.00 I see it as a triple at worst and a 6 bagger at best.
I believe in a longer term bull market for oil and hence believe in BNE. I believe they is opportunity in this fearful market. I continue to buy in with a view to the near term of 4-16 months. I will be happy to get a yield in excess of 50% annually on my average purchase price. Yes its a painfull wait... but it just makes too much common sense. I believe the current market sentiment is wrong... I made my bet and look forward to my vindication.
I previously suffewred through PNE tough time and got rewarded with a car and a house. This time it will be BNE that will secure my future opportunity to retire and lead a comfortable life.